Originally posted by Osceola
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Ag exemption for property taxes
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Originally posted by Austin Kade View PostOk, we were under the impression that by someone having say 7 head of cattle on the 150 acres we have, that we're getting a small break on the taxes, thereby making it worth it to keep the cattle there. This was a working ranch before so I'm not sure if that meets the aforementioned 5-7 year time period. This is in Red River county.
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Originally posted by Silent Assassin View PostGood to know. The tax office did say if I grew vegetables, fruits, I'd have to go out and sell it to customers. I didn't want to do that so I'm going with cattle and goats. That way I deal with rancher, customers that comes to me than I go to them.
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Originally posted by cosmiccowboy View PostBut you have to meet the qualifications for AG exempt as agriculture being your primary business. The law is pretty clear.
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If you are thinking you can deduct it on your federal taxes they really closed that window.
from the IRS
Not-for-Profit Farming
If you operate a farm for profit, you can deduct all the ordinary and necessary expenses of carrying on the business of farming on Schedule F. However, if you do not carry on your farming activity, or other activity you engage or invest in, to make a profit, you report the income from the activity on line 21 of Form 1040 and you can deduct expenses of carrying on the activity only if you itemize your deductions on Schedule A (Form 1040). Also, there is a limit on the deductions you can take. You cannot use a loss from that activity to offset income from other activities.
Activities you do as a hobby, or mainly for sport or recreation, come under this limit. An investment activity intended only to produce tax losses for the investors also comes under this limit.
The limit on not-for-profit losses applies to individuals, partnerships, estates, trusts, and S corporations. It does not apply to corporations other than S corporations.
In determining whether you are carrying on your farming activity for profit, all the facts are taken into account. No one factor alone is decisive. Among the factors to consider are whether:
You operate your farm in a businesslike manner;
The time and effort you spend on farming indicate you intend to make it profitable;
You depend on income from farming for your livelihood;
Your losses are due to circumstances beyond your control or are normal in the start-up phase of farming;
You change your methods of operation in an attempt to improve profitability;
You, or your advisors, have the knowledge needed to carry on the farming activity as a successful business;
You were successful in making a profit in similar activities in the past;
You make a profit from farming in some years and the amount of profit you make; and
You can expect to make a future profit from the appreciation of the assets used in the farming activity.
Presumption of profit. Your farming or other activity is presumed carried on for profit if it produced a profit in at least 3 of the last 5 tax years, including the current year. Activities that consist primarily of breeding, training, showing, or racing horses are presumed carried on for profit if they produced a profit in at least 2 of the last 7 tax years, including the current year. The activity must be substantially the same for each year within this period. You have a profit when the gross income from an activity is more than the deductions for it.
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Originally posted by Osceola View PostThe tax office will determine what your place should make per year.One of my places is one hundred acres and they have it set at $16000 in production a year.
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Originally posted by lameduck View PostHere again wrong answer. I have 308 acres that is under ag exempt. Iam not in the cattle business but lease the grazing rights out. My taxs are around $160 not $6000 I do not make any money on the lease but do save $5840 on taxes This is in my county. I can not speak for the others therefore my first answer still stands
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Originally posted by cosmiccowboy View PostIf you are thinking you can deduct it on your federal taxes they really closed that window.
from the IRS
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Originally posted by Silent Assassin View PostOh ok. Problem is our property is not all open space. Mostly is wooded areas. I tried to ask for timber. They said not in Caldwell County. I figured I could do hay but it's not going to be much with oil wells and pipes in some area so I decided with livestock. That's how I know how many heads I needed.
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Originally posted by Silent Assassin View PostOh ok. Problem is our property is not all open space. Mostly is wooded areas. I tried to ask for timber. They said not in Caldwell County. I figured I could do hay but it's not going to be much with oil wells and pipes in some area so I decided with livestock. That's how I know how many heads I needed.
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Originally posted by cosmiccowboy View PostOpen space can be anything. It can be a pine forest or south texas brush. It doesn't really mean OPEN space like a coastal bermuda field.
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Originally posted by Mister Bubba's bulletman View PostDo you have ag assessment in place already on you place in Caldwell County?
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Hey I'm out. Austin Kade asked for opinion and wanted to find out but this got sidetracked. I do not want to be part of that. AustinKade, I apologize for things to get sidetracked. This is not about my property. It's about yours. I just suggest you to talk to right people at your local tax appraisal office. They will help you with everything. Good luck. I hope all goes well for u.
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